2016 Hay Market Taking Shape

By Jerry Lindquist

Hay markets are constantly changing, and the market of 2016 is no exception. As the first cutting hay harvest is wrapping up across much of Michigan, the hay supply forecast begins to become a little clearer. The Midwest hay supply for most areas has fully recovered from the 2012 drought. Good summer growing conditions in 2015 provided an ample supply of hay and other feeds to be harvested and because of the milder winter, livestock hay consumption was below normal. As a result, a large carry-over of hay was realized on many farms in the spring of this year. Also, in the last two years as grain prices have fallen, hay acres have been increasing. For the most part, those older, lower-producing hay fields that were taken out for corn and soybean acres have been replaced by newer seedings that are just starting to enter their most productive years.

Good first cutting hay yields are being reported across much of Michigan. Some areas of the State have been drier than normal which may start to impact second and third cutting yields, but for the most part, first cutting hay yields have been average to above average in yield. “There was an adequate supply of average to lower quality first cutting hay in 2015,” says MSU Extension forage experts, “and it appears with the spring carry-over and the new first cutting yields, those supplies will be more than adequate this year,” they conclude.

There may be some hay demand brewing in surrounding states as the U.S. Drought Monitor Map shows much of Pennsylvania and Indiana are abnormally dry, as well as Northeast Wisconsin and Northeast Minnesota. If dry weather continues in these areas through mid-summer, there could be increased demand for some of Michigan’s surplus hay. That may be the only uptick on the demand side of the hay market. Pasture growth is abundant which may carry grazing longer into late summer and fall. Milk prices and livestock meat prices have fallen in the last two years causing these farms to curtail expansions and to be more budget conscious when shopping for hay. Currently, overall hay demand does not show signs of being able to take all the hay that will be available on the market.

There still is a substantial price spread between first cutting average to lower quality hays and the higher quality alfalfa dairy hays. Unless the second and third cutting harvest is large this summer, these quality hays will still hold their price above $160 per ton; especially with soybean prices rising. The question right now is: how low do the low quality grass hays have to go to get them sold? Projections by MSU Extension show that even with the decline in fuel and fertilizer prices, it is costing $80 to $90 per ton to make hay in 2016. But in this 2016 market, unless drought areas develop, prices may have to continue moving below $80 per ton to get these abundant low quality first cutting hays sold, which is below breakeven for the average farm. There is still a lot of the growing season yet to go, but with the largest cutting of the season now being harvested, or at least having reached it maximum growth potential in the field, projections for the overall hay supply can start to have some validity.

Note: The Prime Grade Hays are commonly pure alfalfas; Grade 1 & 2 Hays are commonly alfalfa/grass mixed hays and Grade 3 Hays are usually grass hays. Small square bales prices vary widely according to their appeal for the horse hay market.

Source:msu.edu